For more than six months, Thailand's army refused to intervene in the country's worsening political crisis.

When army chief Prayuth Chan-ocha unilaterally declared martial law yesterday, the military was once again reprising its role as arbiter of Thai politics.

However, what happens next remains very uncertain.

Prayuth has the power to nudge the warring sides to the table, almost literally at gunpoint.

But he must still walk a fine line. Prolonging martial law or favouring one side over the other - for instance, allowing the Senate to appoint an interim premier as demanded by the anti-government camp - would trigger resistance and Thailand's fragile peace could unravel.

The army invoked a 100-year- old statute that gives it sweeping powers. It came as a pre-emptive measure, it said, as Thailand teetered towards intensified violence with no end in sight.

The caretaker Puea Thai government said it had not been consulted, though the general told top civil servants at a "consultation" yesterday afternoon that it had been "informed".

Within hours of declaring martial law, the army abolished the government's peace and order committee, replacing it with its own.

In effect, even as Prayuth reportedly told the bureaucrats there was still a government functioning under the Constitution, the caretaker administration has been reduced to a bystander.

The European Union joined other countries in expressing concern. "The priority now is to set a clear timetable for early elections and establish as soon as possible a fully functioning government with democratic legitimacy," it said in a statement.

But after meeting the bureaucrats, the general brushed aside a question on whether an election was part of his game plan.

When reporters asked whether he recognised the authority of the government, he said: "Where is the government?"

He did say, however, that "we will try to get both protesting sides to the table". He also said he would not use all the powers available to him under martial law.

Separately, caretaker Prime Minister Niwatthamrong Boonsongpaisan told reporters that he had asked the Election Commission to set a new date for elections on August 3.

"If the commission agrees, then next week we can issue a decree," he said, adding that he was also willing to talk to the general.

Cabinet minister Chaturon Chaisang said that while the army's move is technically not a coup d'etat - which entails the forcible removal of the government and suspension of the Constitution - it is close to one.

"There is no legal basis or legitimacy for imposing martial law," he said in a phone interview hours after martial law was imposed.

"They have taken over power from a civilian authority and put it in the hands of the army chief without accountability," he said.

"Today, Prayuth is establishing his power, setting the boundaries. Over the next few days, his solution will emerge," he added.

Professor Panitan Wattanayagorn, a Chulalongkorn University political scientist and former spokesman for the opposition Democrat Party, said: "On the positive side, this could create an opportunity for conflicting parties to negotiate, without confronting each other with force.

"But it is clear that the army now has one foot in the conflict, and that is risky."

Analysts also said the army's seizing of security powers gave Suthep Thaugsuban, leader of the royalist People's Democratic Reform Committee (PDRC), a face-saving exit.

The PDRC has been battling to drive the Puea Thai government out of office and has vowed to block new elections pending reforms.

"It does not look good in the eyes of outsiders, but it could be a way to avert the violence that could break out next week, said one analyst who asked not to be named.

A foreign ambassador, speaking on condition of anonymity, told The Straits Times: "In a sense, Thailand is in a better place now than it was yesterday. There is the possibility of dialogue. But an appointed government is still a red line - unless all parties agree to it."

Political science professor Thitinan Pongsudhirak agrees. "It depends on how Prayuth plays it. If he is seen as favouring one side, the other will resist," he said.

Chaturon is not optimistic.

"There are a lot of problems that have accumulated in this political conflict," he said.

"The only way they can be resolved is through the democratic process - not martial law."